I guess we're back to getting accosted outside of Spondivits and I need to dust my old speech about "My brotha, I know you SAY you're a Katrina evacuee, but it's been years and my pocket change clearly isn't enough for you to get anything other than a rock of crack".
During the last month, we have talked about rapidly rising fuel prices and added cost pressures as a new reality that is a permanent part of our business. Therefore, we must permanently change our business to maintain consistent profits even in a permanent high fuel cost environment. That reality requires the most efficient use of our assets and investments. We are moving quickly and aggressively to make needed changes to our business. This includes previously announced plans to reduce capacity this fall by 4 percent, retire 140 less efficient aircraft and look across our business for opportunities to trim costs.
Since 2009, we reduced our facility footprint at 170 airport locations and 10 cargo locations across the system, saving more than $80 million annually. We’ve worked with our airport partners to consolidate concourses in several locations to better match our facilities with our flight schedule. And where we have vacant buildings – such as the former Delta Technology building in Atlanta, the former Comair headquarters in Cincinnati and Building A in Minneapolis/St. Paul – we are aggressively working to sell those buildings.
We have identified additional opportunities to consolidate our facilities in Atlanta and Minneapolis/St. Paul, including:
Selling the Atlanta Reliability Center, a transaction scheduled to close later this summer;
Consolidating our Minneapolis/St. Paul flight attendant training center, pilot training center and flight simulator facilities to Atlanta; and
Consolidating our Minneapolis/St. Paul TechOps Engineering and Technical Support teams to Atlanta.
While we no longer require the MSP Training Center (formerly known as Building N), the Building C Tower, and Hangars 5 and 6, we will continue to need the skills and capabilities of all our flight attendant facilitators, pilot instructors, simulator support employees, engineers and technical support employees. Jobs will be available for all of these employees who are interested in relocating.
We expect this process to begin this year and continue through 2012, though each division will have different timelines based on business needs to ensure a smooth operation.
The return or sale of excess facilities will provide cost savings and will remove these surplus assets from our balance sheet. We must focus our $1.3 billion in annual capital investment on airplanes and airport facilities. In addition, as part of closing Building N, Delta will also reduce our total debt by repaying the outstanding loans with the Metropolitan Airports Commission (MAC). These cost savings will allow Delta to maintain our competitive cost structure while continuing to invest in the airplanes, tools and technology you need to deliver a reliable operation and excellent customer service, as well as in the products and services that provide a superior travel experience for our customers.
We’re firmly committed to Minneapolis/St. Paul. The hub is strong, secure and is a critical part of Delta’s domestic and international network. Our operation and other facilities in Minneapolis/St. Paul remain unchanged. Our airport customer service, cargo, and reservation sales and customer care agents, pilots, flight attendants, aircraft maintenance and information technology professionals will continue to call Minnesota home. The Delta Connection and Regional Elite Airline Services headquarters, cargo facility, and maintenance, repair and overhaul work will continue in Minneapolis/St. Paul as it does today.
Even with these changes, we’ll continue to have more than 12,000 Delta and subsidiary employees living and working in Minnesota, and more than 480 average daily departures from our hub. We’ve continued investing in the facilities where our people work and in the airport experience for our customers. Employees in Building C now are working in fully renovated office space with new workstations, break areas and an on-site café. Our customers have experienced significant investments to our airport lobby, including additional self-service and staffed check-in facilities, flight information screens and directional signage. We’re also working with the MAC to introduce a new food and beverage program on Concourse G next year, offering creations from local chefs that will feature products from local farmers and breweries. These investments are another crucial component of our long-term success.
Additional details about the facility consolidation will be available on DeltaNet and from your leader. Thanks for all you do every day. Because of your hard work, we are well positioned to face this new reality of high fuel prices and cyclical changes.